SOFR Option Weekly Commentary 7/31/26
The FOMC held rates Unch this week in a 9-3 (unch vs hike) vote. PCE (12 month change through June) was 3.7% as expected - falling from May's unrevised 4.1% (12 month change). Traders are taking this month's higher Crude prices into account for next month's inflation readings as the US/Iran war continues.
The current odds of the Fed on Hold through the FOMC's Dec 9th meeting are 12.8% (up from 8.6% last week), while the odds of at least one 25 bp hike are now 87.2% (down from 91.4% last week). The 10Yr is currently trading @ 4.74%.
SOFR Option Vols were lower this week (see attached spreadsheet).